Anyone who is buried in what seems to be an endless stream of debt can look back and pinpoint the times he or she was caught in one of the many traps that the credit card companies set today. If you are not in debt already, you should take heed of these traps. And likewise, if you are buried in debt, it’s time to say no more and stop falling for the traps. You must have a strategy for avoiding the many traps set for you. Here are a few to look out for.
The Emergency Trap
The emergency trap is just as it sounds. It says to use credit cards only for emergencies. The problem is that for most of us life is full of emergencies and those in debt are always pulling out their credit card to get past the latest one. The emergency trap is subtle because it seems like it is justified and in some cases it actually is.
However, you should use the money in your emergency savings account for emergencies, not your credit car. You need to start today to save money for emergencies even if it is a little each month. This way when a family member needs emergency dental service for a toothache, you have the money available to pay the coinsurance. If you must use your credit card for an emergency because you do not have enough cash then make sure you put a freeze on using all credit afterwards. Get that emergency debt paid first.
The Ego Trap
Too many people view their credit cards as an extension of income but it is not. This trap is set when the person needs to have the latest luxuries in order to fit in with their friends. For instance, everyone around him has a smartphone so he needs one too. His neighbors go on expensive vacations each year therefore he needs to take his family on one so they all have something to talk about at the next barbeque. If it is your ego that you are worried about, think about the damage to it when you have to file for bankruptcy because you are drowning in debt. There’s nothing more damaging to the ego than bankruptcy. The best way to avoid the ego trap is to be satisfied with what you have and save for what you want. It used to work in the days of our parents.
The Bargain Trap
There has been some bad advice out there for several years that credit cards are good for when you want to take advantage of a bargain. The only way this is good is if you pay the balance in 30 days. Otherwise, the accumulating interest negates any bargain you thought you took advantage of.
The Promotional Offer Trap
The promotional offer trap goes by such phrases as “90 days same as cash”, “0% interest for 6 months”, “get the cash you deserve”, and a variety of other catchy lines to pull you in. They don’t tell you about the hidden costs of falling into this trap. It is best to just save for what you want instead of biting on promotional offer lures. For example, in the 90 days same as cash offer, it is better to just save the money for 90 days and then buy the item because chances are you won’t pay it off if you fall into that trap. Consider that if you don’t pay it off in 90 days that the interest will be computed going back to the date credit was extended.